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The Fed stalls the creation of a bank with a novel business model

2018-09-22T02:52:50.9072511Z - / Hacker News

A startup called TNB, short for The Narrow Bank, is questioning that assumption, and causing a stir as a result.
With its austere model, TNB could plausibly provide a competitive rate on deposits, while keeping some of the spread between the Fed rate and the interest it pays to customers.
The Fed could cease paying interest to banks, for example, a demand that both America’s political parties have made at times.
But TNB, or a similarly minded institution, could tweak the model in response and invest its deposits in government securities instead.
The central bank may worry that narrow banks, which lend to neither companies nor individuals, could hamper the effectiveness of monetary policy.